On World Food Day, the World Development Movement‘s Miriam Ross says we are less than a month away from a major breakthrough on financial speculation on food – or another Tory vote for the bankers.
Food prices are rising again, with poor harvests in the UK as well as in major grain producing countries like the US. This week, the National Farmers’ Union (NFU) said wheat yields in England were down by almost 15 per cent on the five-year average. In July, the global price of maize hit a record high following predictions of poor harvests in the US.
News stories about soaring food prices are starting to seem familiar: the current price spike is the third in the space of five years. Each one has a devastating effect on the world’s poorest people – the World Bank estimates that rising prices pushed 44 million people into poverty in the last six months of 2010 alone.
But food prices are not determined solely by the amount of food available. During the 2008 food price crisis, which prompted riots in more than 30 countries, prices rose to levels far beyond what could be explained by changes to supply and demand.
The events of 2008 led many analysts to examine the impact of financial markets on food prices, and to conclude that excessive levels of speculation in commodity derivative markets were fuelling sharp price spikes, often amplifying the effects of poor harvests. In effect, banks and hedge funds are betting on food prices.
Regulation to reign in speculation is on the table at the EU, and campaigners across Europe have been pushing to ensure that the new rules are strong enough to prevent speculation pushing up prices.
Predictably, the finance sector has been lobbying hard in the other direction.
The UK arm of the campaign has been led by the World Development Movement, and has generated widespread media attention. But at the EU, the UK Treasury is one of the main opponents of tough regulation.
George Osborne and other European finance ministers are due to vote on the proposed legislation on 13 November, so on the eve of the Tory party conference we projected messages onto the conference venue in Birmingham. And on Monday morning before his keynote speech, we brought a costumed ‘Lady Luck’ with a croupier and a roulette wheel to the ICC, to ask the Chancellor to support strong rules.
Following the finance ministers’ decision, a final agreement will be hammered out between the parliament, the ministers and the European Commission – so the vote on 13 November is key to determining how effective the new regulation will be.
The World Development Movement is asking people to email George Osborne, calling on him to reign in the speculators. The window of opportunity to influence European regulation is narrowing, and this moment is our best chance to make commodity markets work for rather than against the public interest.